Friday May 9,2014 : LOSSES MOUNT AT SCIENTIFIC GAMES
Net loss of $45 million recorded in Q1-2014
The Q1-2014 results for Scientific Games Corporation, which recently acquired WMS, make for rather depressing reading on the numbers side, showing an $11.1 million positive in Q1-2013 reduced to a $12.7 million loss in operating costs in the first quarter of this year.
The company posted an overall net loss for the first quarter 2014 of $45 million (Q1-2013: -$12.3 million) on revenues up 76.7 percent to $388.1 million. EBITDA of $122.8 million (Q1-2013: $77.6 million) was recorded.
CEO David Kennedy reported:
"First quarter revenue rose to $388 million reflecting the first full quarter of contribution from the WMS acquisition and 7 percent revenue growth in our lottery business.
"Although we are seeing challenging gaming industry conditions that have negatively impacted our gaming product sales results, we believe that Scientific Games is relatively well positioned due to the diversity of revenue streams in our lottery and gaming businesses and the opportunities created by our integration efforts.
"Our first quarter results included a $60 million year-over-year increase in cash flow from operating activities and a $37 million year-over-year increase in free cash flow, reflecting the benefit of the WMS acquisition, favorable working capital changes, distributed earnings from our equity investments and our return-focused approach to capital allocation.
"We continued to accelerate our integration initiatives in the 2014 first quarter and believe we remain on track to achieve at least $60 million of cost savings on an annualized run-rate basis by the end of 2014."
In the 2014 first quarter, SG took actions to strengthen its focus on its core businesses by:
* Divesting its equity interest in Sportech plc for cash proceeds of $44.9 million, which resulted in a $14.5 million gain; and
* Selling its online real-money U.K. B2C gaming operation and exiting its managed services online gaming business in Belgium, which resulted in $3.4 million of employee termination and restructuring costs and a gain in other income (expense), net, of approximately $1 million.
On the interactive business side, the company revealed that services revenue from its interactive gaming business increased to $30.8 million.
The growth in revenue from social gaming activities largely reflected the approximately 1.3 million average daily active users (DAU) for the company's social casinos in the first quarter compared to the approximately 600,000 average DAU reported by WMS in the prior-year period, partially offset by a decline in average revenue per daily active user of $0.23 reflecting the impact of a significantly larger player audience and growth in players on mobile platforms
During the quarter the company launched the Gold Fish Social Slots game app, a second social gaming site, and the interactive division entered into several new online gaming content agreements for real-money gaming services, including with Bwin.Party Digital Entertainment.